On construction, Chong and Khoo are “long-term positive”, as the Malaysian government has announced an infrastructure fund to support power, water, roads, electricity, gas and to some extent land.
They believe this should benefit mid-large cap construction stocks like Suncon, Gamunda, IJM Corporation, YTL Corporation, but immediate impact is largely “neutral” given limited details surrounding anticipated infrastructure works.
Meanwhile, they note that the developers involved with Rapid Transit System currently are Suncon, IJM Corporation, Gadang Holdings, Econpile Holdings, which may benefit with further rail network developments.
In the oil and gas industry, the analysts remain “generally positive”. They name Dialog Group as a direct beneficiary given its dominant presence in the liquid bulk storage business in both Pengerang and Tanjung Langsat, and have a target price of 3 ringgit (91 cents).
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Johor-founded Yinson Corporation is also seen as the biggest beneficiary on the theme of green mobility, as the JS-SEZ will directly improve the viability of Yinson’s energy transition businesses which is marinEV. The analysts have a “buy” call and target price of 3.75 ringgit.
Chong and Khoo keep “neutral” on plantation companies, noting that these firms that are strategically situated landbank at Johor could be able to explore avenues to monetise their land assets. These include SD Guthrie and Genting Plantations.
Finally, they view the long-awaited announcement for the JS-SEZ as “neutral to slightly positive” for the property sector in the immediate term. There is no mention of a timeline for public transport improvement, and tax break incentives are not expected to be overly generous, they note.
However, the inclusion of three new flagship zones — Forest City, PIPC and Desaru — will be beneficial to property companies who hold landbank near the surrounding area.
While there was a modest pullback on the KL Property Index following profit-taking activities on selective names, they believe that the establishment of this transformative economic powerhouse is poised to catalyse long-term earnings growth.
As such, they have “buy” calls on weakness on fundamentally strong names such as Eco World, Sunway and Mah Sing.
Their other preferred picks include Dialog Group, Gamunda, IJM Corporation, IOI Properties Group, Lagenda Properties, Pekat Group and SP Setia.
“JS-SEZ themed related stocks (such as Eco World, UEMS, IOI Prop, SP Setia, Mah Sing, Lagenda) rallied by a range of 5%-20% in the past two weeks of which, UEMS and Eco World rose by a larger 20% and 9%, respectively,” they note.
Hence, they believe that the announcement of the JS-SEZ has been reflected in the companies' share prices, leading to the profit-taking observed yesterday. However, there are still laggard plays within the JS-SEZ theme, such as IOI Prop, SP Setia, and Lagenda, as their share prices have yet to experience notable gains since the Johor-themed rally in July 23.
